Budget to announce innovation-friendly tax regime

Arun Jaitley said start-ups represented the final break for entrepreneurs from the licence raj and the govt would be a facilitator and would have a little role in their business

Finance Minister Arun Jaitley said on Saturday the Budget would announce a friendly tax regime for start-ups in the country. “There are some steps that can be taken up by notification, which will be done forthwith. Others require legislative provisions, which can only come as part of the Finance Bill,” he said.

A fund was suggested in last year’s Budget to encourage start-ups, he said and assured them that the banking system and the government would make resources available to them.

Jaitley said start-ups represented the final break for entrepreneurs from the licence raj and the government would be a facilitator and would have a little role in their business.

The finance minister also said the government would launch the Stand Up India scheme for banks to lend to entrepreneurs belonging to the Scheduled Castes and Scheduled Tribes and women. “Each bank branch, public or private sector, will adopt one entrepreneur in the SC/ST category and one in the women category. They will fund them to set up establishments,” he added. Around 300,000 new entrepreneurs would be created over the next two years, the minister said.

Emphasising the government had little room to create jobs, Jaitley said the private sector had its own challenges. “The private sector has overstressed itself and this stress is reflected in our banking system. The Reserve Bank of India and the government, working in tandem over the next few months, are going to add to bankers’ ability to lend more,” he said.

The minister said the government had conceived of the Micro Units Development Refinance Agency (MUDRA) targeting the bottom 25 per cent of the population “so that people get loans from refinance agencies, public and private sector banks and other agencies. In the past four to five months, almost 17.3 million entrepreneurs have been enabled with loans,” he said. “We are going to roll over this programme year after year,” he added.

On the economy, Jaitley observed that India faced challenges despite being the fastest growing large economy in the world. “We can take limited satisfaction that even in a crisis-like situation in the world we are growing much faster,” he said.

“We have increased our public spending, we have opened our doors wide enough and foreign investment is coming in a big way. At least in the urban areas we can see increasing demand,” he said. Talking about the headwinds, the finance minister pointed to slow farm production due to a weak monsoon and subdued private investment.

Commerce and Industry Minister Nirmala Sitharaman said the government was working to make it easy for entrepreneurs to start businesses and exit them. “The government is working to make the exit also (easy),” she said and added Jaitley was working hard on the bankruptcy code, which had been referred to a 30-member joint committee of Parliament. “With these (measures) we will be doing the right thing for start-ups” so that they stay here in India “and not look at having a domicile somewhere else,” she said.